How to Divide Stock Options During a Divorce

During a divorce, distributing shared assets can be difficult. This is especially true in the case of stock options.Throughout the course of marriage, couples can contribute to joint funds together or invest in property. When the marriage ends, however, determining what happens to stock options and assets accrued over the years can get confusing.

This guide will help you plan out how to divide stock options in a divorce.

What are Stock Options?

Stock options is an employment benefit where the employee can purchase a fixed or discounted rate in the company. Stock options allow employees the choice of buying stock in the future, rather than receiving it upfront as a benefit.

Depending on which company you or your spouse works for, these options can be incredibly valuable and are often difficult to divide.

Tip 1: Don’t Ignore the Stock Options

There’s so much to think about during a divorce that it can be tempting to ignore the existence of stock options, especially because they’re typically not liquid until some point down the road. It’s critical not to do this, though.

Just because the stock options haven’t come to fruition yet doesn’t mean they won’t be a major asset when they do, and it’s important to consult with your legal counsel about the best way to divide the options between the two of you.

Tip 2: Understand the Difference Between Marital and Separate Property

How (and if) you can divide stock options depends on whether they’re marital or separate property. When a couple signs a marriage certificate, the assets accrued from there on out are generally “marital property” – meaning they belong equally to both parties.

If stock options were granted after a separation, however, or issued immediately after the marriage for work done before the wedding, there may be some question as to how much of the options are divisible as marital property.

Determining whether stock options are a separate or marital property will require the help of a good divorce lawyer since such a determination typically requires consideration of vested vs. unvested options and other complex legal matters.

Tip 3: Value the Options

If the options are all divisible, they’ll need to be valued. This will determine how much the marital portion of the options is worth, and how much the non-employee spouse will receive. There are several ways to value stock options, all of which require the assistance of skilled divorce lawyers.

To ensure you’re dividing your stock options correctly during a divorce, contact Vaught Law Firm today – your source for family law and divorce attorneys in Austin, TX.